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Vasilis Efthymiou
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Vasilis Efthymiou, Co - Founder of Amadalia, graduated from the Department of Mechanical Engineering, Technological Educational Institute of Larisa. From 2008 he is a full time trader of stocks and ETFs, applying Technical Analysis and the basic principles of Money Management for the creation... More
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  • Elliott Wave Count, Athens General Index ASE:ATH

    Is it going to go up or down? A useful tool for answering this question is the Elliott Wave Theory approach. Elliott wave is an effective way of reading the chart and getting a clearer picture about the future market move. The appropriate application of Elliott Wave analysis enables us to predict in advance the possible direction of markets. Before we see the interesting pattern of the Athens General Index ASE:ATH, let's take a look at the basic concept of an Elliott Wave. In an uptrend, the bull market phase (the impulse wave) has five waves, while the bear market phase (the corrective wave) has three waves. Chart 1 and chart 2 show the above fundamental concept of an Elliott Wave.

    Chart 1

    (click to enlarge)

    Chart 2

    (click to enlarge)

    In a downtrend, the bear market phase (the impulse wave) has five waves, while the bull market phase (the corrective wave) has three waves. Chart 3 and chart 4 depict the above fundamental concept of an Elliott Wave.

    Chart 3

    (click to enlarge)

    Chart 4

    (click to enlarge)

    In the case of the Athens General Index ASE:ATH, we can identify two different Elliott Wave counts. The first count is a bearish impulse wave and the second count is a bullish corrective wave. Let's start with the first count, the bearish impulse wave.

    In chart 5, we can see the weekly price action of the ASE:ATH Athens general index covering the bearish market move since 2008. We can make out a classic Elliott Wave pattern from the peak of 2008 until now (See chart 5).

    Chart 5

    (click to enlarge)

    This Elliott Wave count suggests that the impulse wave is almost complete. The last, 5th wave has not started yet so we should expect the final bearish move in the near future. The price will probably find resistance at the bearish trend line W1 and will move lower, retesting the lowest low value of 08th June of 2012. After the 5th, final wave is over; we can expect an "a, b, c" correction to higher price levels.

    In chart 6, we see again the weekly price action of the ASE:ATH Athens General Index, covering the bearish market move since 2008. If we forget for a moment the first count which we described earlier, another possible count can be identified. This time though we have a corrective wave of a bullish trend. The details can be seen in the chart 6.

    (click to enlarge)

    The second Elliott Wave count suggests that the corrective phase of a major bullish trend is now over and a new impulse wave develops.

    We are now near a critical price level, because the bearish trend line W1 is a very strong resistance line. If the price breaks the trendline upwards, we can be more confident that the second Elliott Wave count is in progress. On the other hand, if the price finds resistance at the trendline w1, then we can consider the first count valid. Either way, unless the price breaks the bearish trendline w1 upwards, it is not safe to consider initiating any long position.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: Greece, Athens, Index
    Nov 13 7:51 AM | Link | Comment!
  • Trading For The Long Term - Land Securities (LAND.LSE)

    A long term analysis of Land Securities (LAND.LSE)

    Land Securities Group PLC is a real estate investment trust (REIT). It owns, manages and develops offices, shops and housing in the United Kingdom. It is part of Amadalia long term investment portfolio since November of 2011. We use monthly, weekly and daily charts in our analysis covering the trend in a long and medium term basis. With this series of posts we will analyze equities which we believe should be part of a long term investing portfolio. Before we begin the analysis of Land Securities, let's make clear what we really mean by long, medium and short term time frames.

    Every trader is unique and has his own style of investing based on his needs, personality, lifestyle and psychological characteristics. A young and active investor for example tends to be more inpatient and courageous, willing to make riskier trades in order to profit in short term time horizon. On the other hand an older investor tends to be more patient and conservative, willing to wait as long as it takes in order to gain stability and security out of his trading strategy. A long term investment strategy usually lasts from several months to several years, a medium term usually lasts from several weeks to several months and a short term investment strategy lasts from several minutes to a couple of days. Because the real estate sector isn't as volatile as other sectors like for example the financial or technology, sometimes it serves as a safe refuge in a bear market or a secure addition to a "retirement portfolio". For the long term trader who wants to build a secure and stable "equity bouquet", the real estate sector can offer him or her some great investment opportunities.

    The general psychology in which Land Securities (LAND.LSE) is trading since 2009 is bullish. After the lowest low price level at about £3.23 in March of 2009, the price now recovers and moves higher (see trendline M1, chart 1). On chart 2, we see the rising MACD indicator which supports the upwards price move and gives extra validity to this bullish trend. The first resistance level on monthly chart 1 is at about £8.95 (see resistance M1, chart 1). At these levels the price will probably find resistance, before it continues the upwards move.

    Chart 1

    (click to enlarge)

    Chart 2

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    The weekly chart3 depicts only the bullish market action since 2009. We can identify the rising channel in which the price is trading (see rising channel, chart 3) and the upper and lower boundaries which act as a resistance and support level respectively. We expect the price to find resistance at £10 - £11 and a strong support at £7.5. With the £10 level as a profit target and the £7.5 as a stop loss, the Reward/Risk ratio of the trade is 1.89/0.61 = 3.1 which is really good.

    Chart 3

    (click to enlarge)

    In order to find the right price level to place our long position, we use the daily chart. On daily chart 4, we can see that the price found resistance at £8.18 level where the resistance D1 is (see chart 4). The first support level is at about £7.80 (see trendline D1, chart 4) and the next one at £7.50 (see support D1, chart 4).

    Chart 4

    (click to enlarge)

    I suggest the investor go long after the price breaks the resistance level D1 at £8.18 upwards, placing a profit target at £10 level and a stop loss at 7.5£. The support level at £7.5 is too important to be broken downwards and a possible bearish breakout, could initiate a trend reversal.

    Tags: Real Estate
    Oct 30 11:09 AM | Link | Comment!
  • RIM (RIMM): The Significance Of The 8.5 Price Level.

    Although the general psychology in which RIM's share is trading is negative since 2009, we are now at a price level where it seems that all the negative news has already been discounted. The price, moves sideways since the end of June of 2012 (see chart 1, trading range) and depicts the uncertainty among investors. Since June, we keep reading a lot about a possible failure of the BlackBerry 10 platform and how this could affect the price action. We also read about the response to that negative news from RIM itself and the promises for a perfect final product which will be able to gain back the lost market share. The truth is that the uninformed, individual investor can't make a decision based only on rumors and promises. The current sideways price move, gives the investor the time to think about the next possible price direction. A price breakout above the trading range (see chart 1, trading range) and an initiation of a new rising trend could be triggered when the news on RIM is really good. The good news for RIM right now could only be the success of the BlackBerry 10 platform and nothing else. This kind of news can't come until the first half of 2013 where the first BlackBerry 10 phones are out to the public and the first sales records become known. On the other hand a possible downwards move under the lowest low price level at about $6.22 could indicate a Blackberry 10 fail and the start of another bearish trend and new lower lows.

    Chart 1

    Chart 2

    Is there a way for the uninformed investor to predict the beginning of a new upwards move by only looking at the price action?

    If we take a closer look at the price chart 2 we can easier see the last major downtrend of the price since January of 2011. Most of the time before a new trend begins; the price consolidates for a while. According to Dow Theory, a major trend consists of three phases which depict the market psychology and the public sentiment. The start of every new trend occurs by the informed buying of the most astute investors who know that the market has assimilated all the bad news and that something is about to change. This buying of the informed investors, causes the price changes and the beginning of a new trend which is called the accumulation phase. The second phase is the public participation phase where the most technical trend followers begin to participate. It occurs when prices begin to advance rapidly and business news improves. The last phase is the distribution phase where the news on the market becomes better than ever and the last investors try to participate in the trend. At the same time the same informed investors who began to open new positions at the accumulation phase, begin to "distribute" before anyone else starts selling. If the uninformed trader could identify and follow the actions of these informed investors, he or she could make better trading decisions. In a trading range, an increase in volume at the upper boundary of the oscillation indicates that a bullish break out is probably near. To the contrary, an increase in volume near the lower boundary of the consolidation could indicate the initiation of a new bearish trend. Watching the volume at significant price levels like a support or resistance, it can be extremely useful in the process of identifying the reversal points.

    As far as RIM is concerned, a significant bullish warning the investor should be aware of, would be a rise in volume near the resistance at $8.5 price level. Such a rise in volume should warn the investor of a possible change in RIM's price and a possible breakout of the resistance, triggered by those informed traders. In our case, such an action does not exist. The low public participation which can be seen in volume of the last trading days (see chart 3, volume), indicates that the majority of the investors prefer to stay at the sidelines at the moment and wait for a price move which will trigger a start of a new major trend.

    Now let's take a look at the technical aspects of this very important trading range (see chart 1, trading range) which as we said before, it depicts the public's uncertainty. For a long term trader the upper boundary of this consolidation area is of great importance. The price oscillates between $6.22 and $8.5 whenever bad or good news is being published. The inability of the stock's price to break the $8.5 level upwards; indicates that for some reason this level is too strong to be broken. On chart 2 we can see the major downwards move since 2011 and the bearish trend line (see trend line W1, chart 2) which serves as a strong resistance level. What makes this bearish trend line so important is the fact that it has been tested too many times in the past without the price being able to break it. Another fact which adds some extra validity to the resistance level of $8.5, is that the bearish trend line coincides with the resistance level at about the same price (see trend line D1 and Resistance D1, chart 3).

    Chart 3

    The last week's price action gives extra validation to the strong resistance level at $8.5. The price wasn't able to break this price level upwards, but instead it continued the sideways move. We should not expect the price to reverse upwards at the moment, but a possible bullish break out of the $8.5 level in the future could indicate the start of a major trend reversal. The long term investor should be looking for an unusual increase in volume near the resistance level and a possible bullish break out. The short term trader can trade the oscillation of the price between the lower boundary at about $6.22 to the upper boundary at about $8.5 (See chart 1, upper and lower boundaries).

    The first half of 2013 is a crucial time period for RIM. The launch of the BlackBerry 10 platform and the first sales reports can reveal the share's future price direction.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Oct 23 2:48 PM | Link | Comment!
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